Fitch assigns SOCAR's USD notes final senior unsecured 'BBB-'

SOCAR's ratings are aligned with Azerbaijan's (BBB-/Stable), as it represents the state's interests in the strategically important oil and gas industry. SOCAR maintains close ties with the government and the State Oil Fund of the Republic of Azerbaijan (SOFAZ) to make financial and investment decisions.

According to a decree by the President of Azerbaijan, SOFAZ and SOCAR will set up a joint venture (JV). SOCAR's cash contribution to the JV will be limited to

AZN49m or 49% of JV's charter capital. SOCAR will also transfer to the JV its stakes in a number of ongoing projects, eg, a 10% stake in Shah Deniz PSA and

related gas pipeline projects in 2023. Thereafter, SOFAZ will lend additional funds to the JV, which it will use to fund its share of investments in these projects.

Although there is no specific decision yet regarding the funding of SOCAR's other announced projects, eg, the oil-gas processing and petrochemical complex (OGPC) in Baku, Fitch expects that these projects will also be funded mostly by SOFAZ. Fitch's sovereign analysts estimate that SOFAZ's assets totalled about USD40bn at end-2013 and expect further moderate growth in sovereign assets.